UPDATE 2-Mexico cuts spending on Brexit, at ready on rates and peso

(Adds economist comment; updates peso, stock market quotes)
By Jean Luis Arce and Alexandra Alper
MEXICO CITY, June 24 (Reuters) - Mexico's government will
cut spending, and the central bank is ready to act on interest
rates in the wake of Britain's vote to exit the European Union,
senior officials said on Friday.
Finance Minister Luis Videgaray said the government would
reduce spending by 31.715 billion pesos ($1.68 billion) in 2016,
its second such cut this year, to reassure markets and help to
keep Mexico's borrowing costs down.
Brokerage Vector said the spending cut represented 0.2
percent of gross domestic product and 0.7 percent of the 2016
budget.
World markets shuddered on Friday after Britain's vote,
although Mexican policymakers said they would act in foreign
exchange markets if they saw pressures specific to Mexico's peso
and that this was not the moment to try to face down a
"tsunami."
The central bank stopped short of taking immediate action on
interest rates but said it was opportune that its regular
rate-setting meeting will be on Thursday.
"If we find that there is a particular situation that hits
the peso, you can be sure we will act with all firmness,"
central bank Deputy Governor Roberto del Cueto said.
Del Cueto also said foreign funds had adjusted their Mexican
holdings but that the move was not worrying.
The central banker ruled out any immediate effect from the
vote on the health of Mexico's financial system, where
London-based bank HSBC Holdings Plc is a big player.
But he said authorities would monitor the situation carefully.
Nomura Securities senior Latin America strategist Benito
Berber said he expected "a lot" of volatility in the next couple
of months.
"In the short term, the financial variables, the Mexican
peso and other Mexican asset prices will bear the brunt of this,
but we have to wait and see," he said. "To the extent that this
impacts the U.S. economy, the effect on Mexico will be much more
clear."
If presumptive Republican nominee Donald Trump does not win
the U.S. presidential election in November, Berber added, the
peso will strengthen to 17.5 to the dollar by year-end.
The peso was down 3.6 percent at 18.8785, after hitting a
record low of 19.5225 just after midnight local time.
Britain's vote to exit the European Union has forced the
resignation of Prime Minister David Cameron and deals the
biggest blow to the European project of greater unity since
World War Two.
While the divorce from the EU is expected to be negotiated
over the next two years, Mexico has already prepared a draft
proposal of a trade deal with the world's fifth-largest economy,
Mexican Economy Minister Ildefonso Guajardo said.
Mexico's benchmark IPC stock index was down 2.66
percent, pressured by companies with hefty dollar-denominated
debt like builder ICA and cement company Cemex
. The two stocks were both down more than 7 percent.
($1 = 18.8812 Mexican pesos)
(With reporting by Ana Isabel Martinez, Adriana Barrera, Luis
Rojas, Frank Jack Daniel and Christine Murray; Writing by Simon
Gardner; Editing by Marguerita Choy and Lisa Von Ahn)